Austria: Autumn collective bargaining rounds give real wage increases of up to 1%

Austria’s annual autumn wage bargaining rounds resulted in nominal wage increases of 1%–2% (around 1% in real terms, correcting for inflation). Collective agreements and wage increases were negotiated in the metal industry, retail sector, public sector, in temporary agency work and in several branches of the agricultural and food industries.

Uniform wage agreements in the metal industry

Autumn traditionally marks the start of the annual wage bargaining rounds in the metal industry. Since the collective bargaining round in 2012, separate negotiations have taken place with all six (subsectoral) employer groups. Until then, a bargaining community had carried out the job for 40 years on the employers’ behalf. In total, more than 180,000 employees are covered by the respective collective agreements.

The largest subsector is the machinery and metalware industry with 120,000 employees, which always starts the sectoral bargaining rounds. The negotiating partner on the employers' side was the Association of the Austrian Machinery and Metalware Industries (FMMI). On the workers' side were trade unions representing two different types of employees – the white-collar Union of Salaried Employees, Journalists and Graphical Workers (GPA-djp) and the blue-collar Austrian Industrial Manufacturing Union (PROGE).

The trade unions started this year with the unusual step of publicly presenting their demands (which are normally kept secret). They demanded a wage increase of 3%, with a focus on lower and medium incomes, due to positive economic forecasts for production and productivity in the manufacturing industries. The negotiations were rather lengthy and, after the third unsuccessful bargaining round, regional works council meetings were held in which information on the current state of the negotiation affairs was provided. After the fourth negotiating round, which took 16 hours, an agreement was finally found on 3 November 2016.

Progressive wage increases, staggered according to income groups were agreed upon as follows:

  • the lowest of 11 income groups (A) is to receive a wage increase of 2%;
  • wage groups B to F are to receive an increase of 1.75%;
  • groups G and H are to receive an increase of 1.5%;
  • the highest wage groups I, J and K are to receive an increase of 1.2%.

On average and over all wage groups, the agreed nominal minimum and actual wage increases are 1.68%. The new minimum wage is now €1,785.03 (gross monthly income, to be paid 14 times a year). For apprentices, a wage increase of 1.75% was negotiated.

The five other subsectors in the metal industry (mining and steel, gas and heating supply, automobile, foundry and non-ferrous metal) finalised their negotiations within 11 days of the FMMI deal.

A total of 14 bargaining rounds were needed to reach six uniform wage agreements for all the different subsectors. With an inflation rate of 0.7% in the 12 months preceding the negotiations, it was possible to achieve a real wage increase of 1% on average. The new collective agreements came into force on 1 November 2016.

Besides the wage increase, the following framework conditions were agreed.

  • All leave periods (for example parental leave) will now be fully recognised for claims that depend on the length of service (for example holiday leave, service anniversary bonus.
  • Transport costs to vocational boarding schools for apprentices will now by paid for by the employer (if not provided for by public subsidies).
  • A free-time option, which allows employees to reduce their working time instead of opting for the wage increase was extended for the automotive and mining/steel subsectors, but not for the largest FMMI subsector.

The collective agreements cover all employees in the metal industry branches. However, there are about another 200,000 employees working for small-scale craft production metal businesses (Gewerbe), for which different collective agreements apply. They were also renegotiated and came into force on 1 January 2017 with a minimum wage increase of (on average) 1.43% and actual wage increases of 1.33%. Their new monthly minimum wage is €1,353.89.

The unions were happy with the outcome, especially with the social progression of the wage increases and with the full recognition of leave periods, which will serve as a role model for other branches and will contribute towards closing the gender pay gap. Employers were also satisfied and consider the acknowledgment of leaves as a significant sign of good social policy.

Retail wages increased by at least 1.3%

In the large retail sector, new collective agreements for the 400,000 white-collar employees and 120,000 blue-collar employees were signed in December, coming into effect on 1 January 2017.

For blue-collar workers, a minimum wage increase of 1.3% was negotiated by the vida trade union and the commerce section of the Federal Economic Chamber (WKÖ); the new minimum wage here is now €1,500. For white-collar workers, GPA-djp negotiated progressive minimum wage increases of between 1.3% and 1.45%, with an average increase of 1.33%. Their new minimum wage is slightly higher, at €1,524. With an inflation rate of 0.8% taken as a starting point for the negotiations, the real minimum wage increases are between 0.5% and 0.65%.

For the 15,000 sectoral apprentices, a new uniform compensation system was negotiated, which no longer differentiates by regions. In the first year of apprenticeship, the compensation is €570; increasing to €720 in the second year, €1,020 in third and €1,070 in the fourth. The average increase is therefore 5.11%.

However, there was no agreement on further union demands on improvements in working conditions, such as embedding paternity leave in the collective agreements or full compensation of vocational boarding school costs by the employers.

Employers have welcomed the sharp increase in apprenticeship compensation as a signal to young people that retail is an attractive trainer and employer, and as a promotion of youth training and employment. The unions are happy that the new minimum wage is closer to their cross-sectoral objective of a gross monthly minimum wage of €1,700.

Further sectoral agreements

Similar outcomes were reached in other sectors in which agreements were concluded in the weeks following. In mid-January, an increase of minimum and actual wages of 1.3% for the 100,000 employees in the private social and healthcare sector was negotiated. In addition, improvements in the framework conditions were reached, such as the inclusion of a legal claim for paternity leave with dismissal protection, or the full recognition of a third leave year for each child towards wage claims that are dependent on the length of service. At the onset of the bargaining rounds, the unions GPA-djp and vida had asked for a shortening of working hours to 35 hours per week with full compensation for wages and personnel. No agreement on this topic has been reached, but separate negotiations are to be started in April. 

In the public sector, in which wages are set by law but in which such wage-setting is preceded by informal bargaining between the social partners, an increase of 1.3% was negotiated. In several subsectors of the agricultural and food industries, a minimum and actual wage increase of 1.35% was negotiated and the free-time option implemented.

For temporary agency workers, an average minimum wage increase of 1.55% was agreed, putting the new minimum wage at €1,556.82 – with low-wage employees receiving an increase of 2.54%.

In the cleaning sector, an average increase of 1.36% was negotiated; for employees of travel agencies, the minimum wage increase is 1.2% and, in the small-scale craft transport sector a relatively large increase of 2.7% was agreed.

Generally, the negotiated wage increases are around the levels negotiated in the autumn of 2015 (for example, minimum wage increases of 1.5% in the metalworking industry and in retail, and 1.3% for public sector employees). However, as inflation in 2015 was slightly higher (at around 1%), real wage increases have slightly increased compared with the previous year.

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